The US Federal Automated Vehicles Policy is a critical step forward for that nation, and gives Australia a potential blueprint for the evolution of our regulatory framework. 

In our recent report on regulating driverless vehicles in Australia, we noted the need for Australian Governments to amend our road laws to permit the use of more highly automated vehicles that don't require a human driver to constantly watch the road and remain ready to resume control of the vehicle if necessary.

Across the Pacific Ocean, the Federal Automated Vehicles Policy was unveiled on 20 September 2016 by the US Department of Transportation and its National Highway Traffic Safety Administration (NHTSA). The long-awaited report represents the first US federal policy instrument addressing the multitude of risks and liability issues posed by highly automated vehicles (HAVs).

The US policy helpfully signals where the lines of responsibility might be drawn for regulators and auto manufacturers. It is a critical step forward for a nation that houses the headquarters of some of the world's pre-eminent leaders in the space of autonomous vehicles, and provides a potential blueprint for the evolution of our regulatory framework for motor vehicles in Australia.

Themes from US policy

What is the key task here for law-makers? It is to develop laws that strike an acceptable balance between two competing interests: the need to guard the personal safety of road-users, on the one hand; and promoting an innovative technology that has the potential to yield immense social and economic benefits in the long-term, on the other. This is a challenging endeavour. Against this backdrop, several themes emerge from the US policy.

1. Guidelines, not rules

The US policy takes the form of guidelines, rather than mandatory rules. This is sensible given present uncertainties as to how the technology will develop, and the impacts it will have. The NHTSA has indicated that it will continue to consult on the guidelines, and that aspects of the guidelines may develop into mandatory rules in due course. A similar approach would make sense for Australia.

2. Allocating responsibilities between Federal and State regulators, and achieving uniformity

Like Australia, it is the State Governments in the US that are responsible for regulating most aspects of road safety and the use of motor vehicles. Divergent regulatory approaches among the 50 States could create a patchwork of inconsistent laws that would impede innovation and the expeditious deployment of safety enhancing self-driving technologies.

The US policy contemplates that the Federal Government will continue to be responsible for setting Federal Motor Vehicle Safety Standards for new motor vehicles and motor vehicle equipment, and the States will continue to be responsible for regulating the human driver and most other aspects of motor vehicle operation. But as motor vehicle equipment increasingly performs "driving" tasks, the Federal Department of Transport role will increasingly encompass tasks similar the "licensing" of the non-human "driver" (ie. the automated driving systems).

The policy strongly encourages the States to allow the Federal Department of Transport alone to regulate the performance of HAV technology. It has suggested that if a State wishes to pursue such regulation, the State should consult with the NHTSA and base its efforts on the vehicle performance guidance provided within the US policy. The States will continue to regulate human drivers, vehicle registration, traffic laws, liability and insurance.

The US policy suggests that the States should review their current laws to address any unnecessary obstacles to the safe testing, deployment and operation of HAVs, and update references to a human driver as appropriate. As noted in our recent report, the same exercise needs to occur in Australia. The US policy suggests that the States may wish to deem an HAV system that conducts the driving task and monitors the driving environment to be the "driver" of the vehicle. For vehicles in which the human is primarily responsible for monitoring the driving environment, the US policy recommends that the States consider the human to be the driver for the purposes of traffic laws and enforcement.

The US policy contemplates that while the Federal Government will set and enforce the safety and performance standards for HAVs, the States would regulate the procedures for granting permission to vehicle manufacturers and owners to test and operate HAVs within a state. Manufacturers and others seeking permission to test a vehicle should certify that the vehicle follows the Performance Guidance published by the NHTSA and meets the applicable Federal Motor Vehicle Safety Standards, and should provide evidence of their ability to satisfy a judgement for damages for personal injury, or property damage, for no less than US$5 million.

In the US, States are responsible for determining liability rules for HAVs. The US policy recommends that the States consider how to allocate liability among HAV owners, operators, passengers, manufacturers and others, and who must carry motor vehicle insurance. The policy notes that laws deeming the HAV system to be the driver in a given circumstance will not necessarily determine liability for crashes involving a human driver. For example, States may determine that in some circumstances liability for a crash involving a human driver of an HAV should be assigned to the manufacturer.

Australia has a similar division of responsibilities between Federal- and State-based road and motor vehicle regulators. As in the US, our Federal Government regulates safety standards for new motor vehicles, and our States regulate the human driver and most other aspects of motor vehicle operation. Accordingly, a similar approach to the regulation of HAVs could be adopted in Australia, to ensure uniformity of regulation so that HAVs can operate seamlessly across Australian State borders. As noted in our report, there are complex issues that need to be considered before imposing deemed liability for crashes on manufacturers, maintainers or suppliers of HAVs.

A co-operative effort is currently underway between State Government agencies and the NTC. The NSW Parliamentary Committee on Road Safety recently commented that the NTC "is engaging in a practical and consultative way with NSW and other jurisdictions to achieve a national framework for regulating the deployment of automated vehicle technology".

3. Options for vehicle certification and standards

The advent of new transportation technologies revives the age-old debate between self-certification by manufacturers coupled with post-market audits, on the one hand, and the more stringent process of pre-market approval and certification by government, on the other. The former applies to vehicle manufacturers in the US, while the latter approach applies in Australia. The US policy discusses their relative merits.

The most significant implications of this choice relate to accountability for driverless vehicles and the associated risks. Self-certification places the onus of accountability squarely on manufacturers of these risky technologies, who are arguably best placed to manage the risks. Some manufacturers have indicated they are not averse to this responsibility. Volvo set the bar last year when it publicly stated that it would accept "full liability" for any of its vehicles operating in autonomous mode.

Australia's certification scheme under the Motor Vehicles Standards Act 1989 (Cth) requires manufacturers to obtain an approval or exemption from the Federal Administrator of Vehicle Standards before a new vehicle can be sold in Australia. Given the risk and uncertainty that still surrounds driverless vehicles, our Federal Government might be hesitant to move to a self-certification model and entrust this responsibility to manufacturers.

Interestingly, the US policy discusses the possibility of moving to a pre-market approval approach, which would prohibit the sale of a HAV without prior NTHSA approval. It also discusses a hybrid approach under which auto manufacturers would retain responsibility to self-certify compliance with vehicle standards, and NHTSA would conduct pre-market approval for novel features not yet addressed in the standards. As the technology continues to develop, the onus for certification in relation to these novel points would be incrementally transferred to manufacturers as and when they are incorporated into the standards. Were the US to adopt either approach, it would signal a move closer to our Government's system of certification, and a desire by US authorities to keep closer controls over the deployment of driverless vehicles.

The US policy also discusses the need to regulate software updates that can alter the functions and technical capabilities of vehicles. Australian regulators will also need to consider this issue.

4. Sharing information

Finally, the US policy encourages manufacturers to share the data that they collect on accidents and cybersecurity attacks with their competitors. The sharing of this data will accelerate knowledge and understanding and, in turn, the safety benefits that self-driving vehicles offer. Industry members should not have to experience the cyber vulnerabilities and safety incidents in order to learn from them. These are laudable objectives, but are they commercially realistic? Driverless technology is being fuelled by aggressive investment by leading auto-makers around the world. The race to develop a marketable and suitably safe vehicle is extremely competitive. At the heart of this race is continuous testing and the collation of data. In this context, it will be interesting to see how the international auto manufacturing industry responds to the US Department of Transportation's suggestion.

Where is Australian regulation heading?

The NTC is due to meet with Australian transport ministers in November 2016 to make final recommendations regarding the future direction for the regulation of autonomous vehicles in Australia. No doubt the NTC is busily considering the extent to which our regulatory framework should be influenced by the recent developments in the US. Don't be surprised if a number of common features emerge!